Saturday, June 23, 2012

Steve, where do I begin? Lets start up with the Eurozone and take it from there. I was the first to mention to you that the Spanish Bailout had already happened before it was even announced that they were going to need more within the week. Well a week has passed and it said that both Italy and Spain need an almost $1 Trillion dollar bailout. The reason? Apart from both being insolvent, Italy has to borrow money at 7% to lend to Spain at 3% by edict of the Euro Technocrats via ECB. These morons have the economics understanding of a five year old. Now both countries are heading the way of Greece, which is total economic death as Greece is a failed state, with no government, a stolen election and thousands starving to death.

Steve as I said the Euro is unofficially collapsed with a major "OFFICIAL" collapse coming this fall or winter. I said many times to my cohorts , though the Eurozone has it's problems, it is the US that is the Supreme Emperor with No Clothes the Eurozone are just vassals. The problems facing the US are much, much worse. With very high unemployment, debt to the stratosphere and an economy in rigor mortis, the US is a patient on his death bed waiting for the elite power brokers to give it it's last rights and then devour the patient's body.

Couple of points that, I need to revisit for your readers and listeners are as follows:

1. Real Estate- The real estate, in the US, has in no way hit the bottom--yet. Not in the FEH (Financial Economics Hubs) like New York but I tell you that you will see a housing market crash the likes of which you have never seen or will ever see again. This will occur for the following reasons. (more)

To review ONEOK's stock, please take a look at the 1-year chart of OKE (ONEOK, Inc.) below with my added notations:

OKE has been trading mostly within a broad, sideways range for the last (6) months. During this time, the stock appears to be finishing up the formation of a Rectangle pattern. Rectangle patterns form when a stock bounces between a horizontal support and resistance. A minimum of (2) successful tests of the support and (2) successful tests of the resistance will give you the pattern. For OKE, the Rectangle pattern formed a clear $40 support (blue) and seems to be pulling away from the $45, 52-week high resistance (black) again.

The Tale of the Tape: OKE has probably formed a very common chart pattern known as a Rectangle. The possible long positions on OKE would be either on a pullback to $40, or on a breakout above $45. The short opportunity would be on a breakdown below $40.

One of the things that’s really unique about this part of the world is having access to so many people with first-hand experience of living under Soviet rule.

It’s a bizarre thing to say, but the stories they have to tell are extraordinary.

Last night I had dinner with some friends, including one woman who was just a child at the end of World War II.

She explained to me that her family had been wealthy landowners near the capital city… until the Soviet-controlled government came in, confiscated all of their property, and shipped the adults off to Siberia.

“There were so many opportunities to leave beforehand,” she explained, ”but they just never thought things would ever get that bad here. Everyone saw what happened in other countries, but my family never expected that it would happen to them.” (more)

This economic decline has been really hard on everyone, but it has been particularly hard on American men. During the last recession male employment dropped like a rock and it has not recovered much at all since then. That is why many referred to the last recession as a "mancession". Industries where men are disproportionately represented such as construction and manufacturing have really been hit hard in recent years. In the old days, you could take a high school education down to the local factory and get a job that would enable you to live a middle class lifestyle and support a growing family on just that one income. Sadly, those days are long gone. Today, American men live in a world where their labor is not really needed. Wages are falling because almost any worker can be easily replaced by the vast pool of unemployed American workers that are currently searching for work, and a lot of big companies are shifting labor-intensive jobs overseas where workers only make a small fraction of what they make in the United States. American workers (especially those without much education) are considered to be expensive liabilities in a world where labor has become a global commodity. So the percentage of working age American men that have jobs is likely to continue to decline and wages are likely to continue to stagnate as well.

For many men, a long-term bout with unemployment can almost be worse than a major illness. It can be really hard to feel like a man when you don't have a job. Men often see themselves as filling the "provider" role, and when they aren't providing for their families self-esteem can fall through the floor. It is easy to feel worthless when there is no money coming in and your wife and your kids are looking at you with worry every single day.

As you read this, there are millions upon millions of unemployed men sitting at home with a glazed look in their eyes. When you talk with these men, many of them seem as though the life has been sucked right out of them.

As I wrote about recently, when you cannot find a job month after month after month people start to look at you differently. Some start to look at you with pity in their eyes, and others start to look at you with disgust in their eyes.

Most Americans don't really understand how much the economy has fundamentally changed, and many of them still believe that it shouldn't be too difficult to find a job in "the greatest economy on earth". (more)

After the DJIA lost 251 points, Moody’s finally released its rating cuts for 15 banks. According to Zero Hedge, four firms were cut by a notch, 10 firms were downgraded two notches, and only one firm was cut three notches, with Morgan Stanley surviving with a two level drop rather than the three that was expected.

Fannie Mae reported last month that it made money in the first quarter and wouldn’t require more money from the taxpayers (for now). The company reported a quarterly profit of $2.7 billion. However, the New York Times reports that the GSE received $116 billion from Treasury over the past three and half years while paying back $23 billion in dividends. At the same time, Freddie Mac needed $72 billion in bailout money while paying back $18 billion.

But while BoA, J.P. Morgan, Fannie and Freddie live on, Russia Today (RT) reports that for more and more underwater, foreclosed-upon homeowners, suicide is the only answer. Death by foreclosure is quietly going on around the country reports the RT. And as more depressed people are evicted from their homes the death toll will continue to rise.

Weak economic data from the US and China has encouraged selling of stocks and commodities over the last 24 hours. Americans’ claims for unemployment benefits remained at essentially the same level as last month, while a Philly Fed regional manufacturing survey showed yet another contraction. Brent crude futures fell 3.7% to settle at $89.23 a barrel – their lowest close since December 2010, while WTI lost 4% on the day to settle at $78.20, the lowest since October. Coming just a day after the Fed disappointed investors with its “no QE3 yet” message, it’s little surprise that we’re seeing the same old dash to the US dollar and Treasuries, as deflation expectations rise. The Dollar Index (USDX) is back above 82.00, while the yield on the 10-Year Treasury Note has fallen to 1.62%.

Not so fast. Before you just get impulsive look at the chart below that really shows today’s breakout action.

As you can see, you had all of about 30 seconds to pick this name off in the 96 level. But ever place an order to buy in a fast market? Odds favor you don’t get the instant execution and odds favor you’d have got filled a lot higher than where you entered the order. Our point to this is while it’s a breakout and that is a good thing, you are now instantly chasing this stock. Don’t get us wrong, we like the pattern and confirmation of the breakout, but more often than not just sitting back and allowing a lower risk Pullback Off Highs pattern to develop or even an initial pullback is a much better trade.

I think there are really only two good reasons for having a significant amount of money: To maintain a high standard of living and to ensure your personal freedom. There are other, lesser reasons, of course, including: to prove you can do it, to compensate for failings in other things, to impress others, to leave a legacy, to help perpetuate your genes, or maybe because you just can't think of something better to do with your time.

But I'll put aside those lesser motives, which I tend to view as psychological foibles. Basically, money gives you the freedom to do what you'd like – and when, how and with whom you prefer to do it. Money allows you to have things and do things and can even assist you to be something you want to be. Unfortunately, money is a chimera in today's world and will wind up savaging billions in the years to come.

As you know, I believe we're into at least the fourth year of what I call The Greater Depression. A lot of people believe we're in a recovery now; I think, from a long-term point of view, that is total nonsense. We're just in the eye of the hurricane and will soon be moving into the other side of the storm. But it will be far more severe than what we saw in 2008 and 2009 and will last quite a while – perhaps for many years, depending on how stupidly the government acts. (more)

Grain prices have been heading north this week, and I’m not surprised. And from where I’m sitting, it looks like they’re set to surge higher yet.

Weather is the short-term driver and, after a brief correction, wheat prices are up more than 6%, soybeans have rallied by 7.5% and corn prices have exploded 11% in less than two weeks.

But, in the long term, grain prices will continue to move higher for some very fundamental, demographic reasons, and chief among them is the fact that the world’s population is skyrocketing.

In 2011, the global population eclipsed 7 billion people. The rate of population growth has been nothing short of astonishing, with the number projected to hit 8 billion by 2025 – a mere 13 years from now.

The regions with the highest rate of population growth in the world are in Asia, Africa and the Middle East.

For some that’s a concern – but for the savvy sovereign investor, it’s an opportunity.